Enabling design characteristics and budget usefulness
Keywords:Budgeting, Middle managers, Budgeting usefulness, Enabling-coercive framework
This study aims to investigate the influence of budgeting design characteristics on perceived budgeting usefulness, based on the enabling-coercive framework.Design/methodology/approach
This paper develops a survey in one large publicly-listed Brazilian company that operates in the electric utility industry. The sample comprises 75 middle managers from different areas of this organization. This study uses structural equation modeling as the data analysis method.Findings
The results indicate that internal and global transparencies determine middle managers’ perceptions of budgeting usefulness, while no relationship was found for repair capacity and flexibility characteristics. This paper shows that managers, when provided with global and internal transparencies and independently of their level discretion regarding target revisions or the reallocation of resources, perceive budgeting systems as being useful for decision-facilitating and decision-influencing roles.Practical implications
The findings might be relevant for budgeting professionals to review or design the budgeting system in terms of dribbling potential flaws and increasing its use in the organization.Originality/value
The study explores the multidimensionality of the enabling-coercive budgeting design construct. This study provides a theoretical contribution to the literature by showing that budget alignment, integration, learning and information sharing are relevant such that an organization could improve the assertiveness using budgeting systems. Besides, this paper provides an opposing view about the supposed relation between flexible budgeting design and budgeting usefulness. Frequently, some management directions are offered by the literature and no guarantee is provided in terms of the connection between the adoption and the usefulness of those mechanisms. Therefore, the findings shed more light on the practical developments in budgeting.
Adler, P. S., & Borys, B. (1996). Two types of bureaucracy: Enabling and coercive. Administrative Science Quarterly, 41(1), 61–89, doi: 10.2307/2393986.
Ahrens, T., & Chapman, C. S. (2004). Accounting for flexibility and efficiency: A field study of management control systems in a restaurant chain. Contemporary Accounting Research, 21(2), 271–302, doi: 10.1506/VJR6-RP75-7GUX-XH0X.
Beuren, I. M., & Santos, V. D. (2019). Sistemas de controle gerencial habilitantes e coercitivos e resiliência organizacional. Revista Contabilidade & Finanças, 30(81), 307–323, doi: 10.1590/1808-057x201805850.
Burney, L. L., Radtke, R. R., & Widener, S. K. (2016). The intersection of ‘bad apples’, ‘bad barrels’, and the enabling use of performance measurement systems. Journal of Information Systems, 31(2), 25–48, doi: 10.2308/isys-51624.
Chapman, C. S., & Kihn, L. A. (2009). Information system integration, enabling control and performance. Accounting, Organizations and Society, 34(2), 151–169, doi: 10.1016/j.aos.2008.07.003.
Cohen, J. (1988). Statistical power analysis for the behavioral sciences, Mahwah, NJ: Lawrence Earlbaum.
Demski, J. S., & Feltham, G. A. (1976). Cost determination: A conceptual approach, Ames: Iowa State University Press.
Dillman, D. A. (2007). Mail and internet surveys: the tailored design method, New York, NY: John Wiley.
Englund, H., & Gerdin, J. (2015). Developing enabling performance measurement systems: On the interplay between numbers and operational knowledge. European Accounting Review, 24(2), 277–303, doi: 10.1080/09638180.2014.918517.
Fauré, B., & Rouleau, L. (2011). The strategic competence of accountants and middle managers in budget making. Accounting, Organizations and Society, 36(3), 167–182, doi: 10.1590/1808-057x201908210.
Frow, N., Marginson, D., & Ogden, S. (2010). Continuous’ budgeting: Reconciling budget flexibility with budgetary control. Accounting, Organizations and Society, 35(4), 444–461, doi: 10.1016/j.aos.2009.10.003.
Guggenberger, M., & Rohlfing-Bastian, A. (2016). Delegation of strategic decision-making authority to middle managers. Journal of Management Control, 27(2-3), 155–179, doi: 10.1007/s00187-015-0223-0.
Hair, J. F., Hult, T. M., Ringle, C. M., & Sarstedt, M. (2013). A Primer on Partial Least Squares Structural Equation Modeling (PLS-SEM), Sage Publications: Newbury Park, California, US.
Hair, F., Jr, Black, W. C., Babin, B. J., Anderson, R. E., & Tatham, R. L. (2009). Análise multivariada de dados (6th ed.). Porto Alegre: Bookman.
Haka, S., & Krishnan, R. (2005). Budget type and performance – the moderating effect of uncertainty. Australian Accounting Review, 15(35), 3–13, doi: 10.1111/j.1835-2561.2005.tb00247.x.
Hansen, S. C., & Van der Stede, W. A. (2004). Multiple facets of budgeting: An exploratory analysis. Management Accounting Research, 15(4), 415–439, doi: 10.1016/j.mar.2004.08.001.
Hartmann, F., & Maas, V. (2011). The effects of uncertainty on the roles of controllers and budgets: An exploratory study. Accounting and Business Research, 41(5), 37–41, doi: 10.1080/00014788.2011.597656.
Henri, J. F., Massicotte, S., & Arbour, D. (2019). Exploring the consequences of competing uses of budgets. Australian Accounting Review, 30(4), doi: 10.1111/auar.12287.
Henttu-Aho, T. (2016). Enabling characteristics of new budgeting practice and the role of controller. Qualitative Research in Accounting & Management, 13(1), 31–56, doi: 10.1108/QRAM-09-2014-0058.
Jordan, S., & Messner, M. (2012). Enabling control and the problem of incomplete performance indicators. Accounting, Organizations and Society, 37(8), 544–564, doi: 10.1016/j.aos.2012.08.002.
Jørgensen, B., & Messner, M. (2009). Management control in new product development: The dynamics of managing flexibility and efficiency. Journal of Management Accounting Research, 21(1), 99–124, doi: 10.2308/jmar.2009.21.1.99.
Kihn, L. A. (2011). How do controllers and managers interpret budget targets? Journal of Accounting & Organizational Change, 7(3), 212–236, doi: 10.1108/18325911111164187.
Kren, L. (1992). Budgetary participation and managerial performance: The impact of information and environmental volatility. Accounting Review, 67, 511–526. Retrieved from jstor.org/stable/247975
Libby, T., & Lindsay, R. M. (2010). Beyond budgeting or budgeting reconsidered? A survey of North-American budgeting practice. Management Accounting Research, 21(1), 56–75, doi: 10.1016/j.mar.2009.10.003.
Magner, N., Welker, R. B., & Campbell, T. L. (1996). Testing a model of cognitive budgetary participation processes in a latent variable structural equations framework. Accounting and Business Research, 27(1), 41–50, doi: 10.1080/00014788.1996.9729530.
Malmi, T., & Brown, D. A. (2008). Management control systems as a package—opportunities, challenges and research directions. Management Accounting Research, 19(4), 287–300, doi: 10.1016/j.mar.2008.09.003.
Marginson, D., & Ogden, S. (2005). Coping with ambiguity through the budget: The positive effects of budgetary targets on managers' budgeting behaviours. Accounting, Organizations and Society, 30(5), 435–456, doi: 10.1016/j.aos.2004.05.004.
Mucci, D. M., Frezatti, F., & Dieng, M. (2016). As múltiplas funções do orçamento empresarial. Revista de Administração Contemporânea, 20(3), 283–304, doi: 10.1590/1982-7849rac2016140121.
Nitzl, C. (2016). The use of partial least squares structural equation modelling (PLS-SEM) in management accounting research: Directions for future theory development. Journal of Accounting Literature, 37, doi: 10.1016/j.acclit.2016.09.003 0737-4607/ã.
Nouri, H., & Parker, R. J. (1998). The relationship between budget participation and job performance: The roles of budget adequacy and organizational commitment. Accounting, Organizations and Society, 23(5-6), 467–483, doi: 10.1016/S0361-3682(97)00036-6.
Podsakoff, P. M., MacKenzie, S. B., & Podsakoff, N. P. (2012). Sources of method bias in social science research and recommendations on how to control it. Annual Review of Psychology, 63(1), 539–569, doi: 10.1146/annurev-psych-120710-100452.
Ringle, C. M., Wende, S., & Becker, J.-M. (2015). SmartPLS 3. Software, SmartPLS GmbH.
Schmid, T., Floyd, S. W., & Wooldridge, B. (2010). Putting the manager back into the picture: The value of a strategy process perspective. In P. Mazzola, & F. W. Kellermanns, (Eds), Handbook of research on strategy process (pp. 142–164). Cheltenham: Edward Elgar.
Souza, G. E., & Beuren, I. M. (2018). Reflexos do sistema de mensuração de desempenho habilitante na performance de tarefas e satisfação no trabalho. Revista Contabilidade & Finanças, 29(77), 194–212, doi: 10.1590/1808-057x201805850.
Sponem, S., & Lambert, C. (2016). Exploring differences in budget characteristics, roles and satisfaction: A configurational approach. Management Accounting Research, 30, 47–61, doi: 10.1016/j.mar.2015.11.003.
Swieringa, R. J., & Moncur, R. H. (1975). Some effects of participative budgeting on managerial behavior, National Association of Accountants.
Van der Stede, W. A., Young, S. M., & Chen, C. X. (2005). Assessing the quality of evidence in empirical management accounting research: The case of survey studies. Accounting, Organizations and Society, 30(7-8), 655–684, doi: 10.1016/j.aos.2005.01.003.
van Veen-Dirks, P. (2010). Different uses of performance measures: The evaluation versus reward of production managers. Accounting, Organizations and Society, 35(2), 141–164, doi: 10.1016/j.aos.2009.02.002.
Vandenbosch, B. (1999). An empirical analysis of the association between the use of executive support systems and perceived organizational competitiveness. Accounting Organizations and Society, 24(1), 77–92, doi: 10.1016/S0361-3682(97)00064-0.
Wouters, M., & Roijmans, D. (2011). Using prototypes to induce experimentation and knowledge integration in the development of enabling accounting information*. Contemporary Accounting Research, 28(2), 708–736, doi: 10.1111/j.1911-3846.2010.01055.x.
Wouters, M., & Wilderom, C. (2008). Developing performance-measurement systems as enabling formalization: A longitudinal field study of a logistics department. Accounting, Organizations and Society, 33(4-5), 488–516, doi: 10.1016/j.aos.2007.05.002.
Copyright (c) 2021 Daniel Magalhães Mucci, Fábio Frezatti , Diógenes de Souza Bido
This work is licensed under a Creative Commons Attribution 4.0 International License.
Management Department of the School of Economics, Management and Accounting of the University of São Paulo.
The publication of article segments is allowed, subject to prior authorization and source identification.
Copyright is regulated under Licença Creative Commons Attribution